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Indonesia: Mobile Penetration
The Indonesian Mobile Market: Then and Now
The mobile market in Indonesia has grown rapidly over the past decade; an increasing amount of Indonesians are making use of mobile phones to do banking, trading, money transferring, and commerce on a daily basis. It is no wonder why Indonesia is by far regarded as the most profitable mobile market in East Asia with the highest mobile subscriber growth in the region. In fact, the country is the 3rd largest and most vibrant market in Asia (see graph below). The Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins climbed to 64.9% in the 3rd quarter of 2007 and although these margins declined a year later, the sector is still robust by international standards.
In 2002, the total number of mobile subscribers in Indonesia stood at 65 million. Five years later, in 2007, the number rocketed to nearly 65 million. Fast forward, the country boasts 144.65 million mobile subscribers to date. The mobile penetration rate is at a whooping 56.8% as of September 2009, surpassing India, however lagging behind its neighboring countries such as Singapore.
Indonesia is predicted to be the third largest mobile market after China and India by 2010 according to the ROA Group.
Badan Regulasi Telekomunikasi Indonesia (BRTI)
Indonesia’s telecom regulator is Badan Regulasi Telekomunikasi Indonesia (BRTI) and can also be known as Indonesian Telecommunications Regulatory Body. The BRTI has announced the year 2009 as “Year of Quality Service” for the telecommunications sector; the country will expect to see a sharp rise in quality services in their telecommunications sector.
Much potential is left to be explored in the mobile market:
1. Telecommunication Service Providers
2. Indonesians and Their Mobile Phones
3. The Rise of Smart Phones
4. 3G Fever
5. On The Consumer Front
6. Future Trends
1. Telecommunication Service Providers
The Indonesian mobile phone market is very competitive, with 11 telcos and Telkomsel dominateing the pool with 50% market share. The other two big players are Indosat (24% market share) and XL (15%). Some of the smaller players include Telkom Flexi (6%), Mobile8 (3%) and Bakrie Telecom (2%).
The top 3 operators now boast a population coverage of over 90% while their smaller GSM counterparts such as Indosat, Satelindo, Mobisel/Orbit and Excelcomindo cover an estimated 70% combined. The presence of these smaller GSM operators have contributed to a healthy competitive environment and helped keep prices low and thus drove industry revenue per minute down by 85%. The lower rates offered by the different providers, coupled with the emergence of cheaper handsets mean that more Indonesians can afford mobile telephony.
While GSM cards offer global coverage, pre-paid cards offer different coverage, offering networks in only a few islands. For example, Exelcomindo’s prepaid service (PRO XL) only offers coverage in Java and Bali only.
More than 90 percent of mobile phone customers in Indonesia use pre-paid cards. Such users are more price-sensitive and likely to switch to competing operators who offer cheaper tariffs.
2. Indonesians and Their Mobile Phones: Till Death Do Us Part
Apart from the usual food stall, there is now a new symbol in the daily life of an Indonesian – the mobile phone and the phone credit stores. These stores sell anything ranging from a cheap mobile phone to pre-paid credit phone cards. There are also stores that pimp mobile phones where customers can buy anything from mp3s or customized casings for their phones.
Over the years, mobile phones have become an integral part of an Indonesian life especially after the Indonesian government de-regulated the telecommunications market in 2000.
3. The Rise of Smart Phones: Combining Internet and Mobile Phones
Clearly, mobile phone penetration is much more successful than internet penetration rates. However, there is a closer relationship between the Internet and telecommunication service when we examine the mobile social networking space in Indonesia.
Mobile Monday recently launched Mobile Monday Indonesia, which has so far held events discussing the growing relevance of mobile social networking sites such as mobile advertising and how to develop mobile social networking applications.
More Indonesian mobile web users are predicted to be found in upcoming years. As figured in Opera website, the number of people in Indonesia who are using Opera Mini to access the web is increasing by a sheer amount of 186.1% per year starting from year 2008. This amount is huge as not all handsets are bound to use Opera Mini, especially PDAs, BlackBerries, and iPhones who have their own web browsers.
Already, mobile users in Indonesia far outnumber active Internet users by 5 to 1, and the country boasts a 56.8% mobile penetration rate verses a 10.4% according toInternet World Stats.
According to data on the InMobi network, Indonesia’s mobile Internet user base has more than doubled within the last 12 months. InMobi estimates 9 million mobile Internet users currently in Indonesia, with 591 page views per user, exceeding the approximate global average of 250 page views per user (source: Opera, 2009). Handset manufacturers are taking notice, as 80% of handsets sold in Indonesia are web enabled.Costly ISP plans, unreliable fixed line infrastructure, and inexpensive mobile data plans with unlimited mobile web usage are also encouraging the adoption of mobile internet browsing.
Specifically, 53% of mobile web users are between the ages of 18 and 27, and 82% of the total number of mobile web users are male.
The top mobile Internet operator in Indonesia is Indosat, which leads the market with 75% share, followed by Telekomsel with 18% and Excelcomindo with 3%. Fierce competition between mobile operators and a price war between vendors created an influx of affordable mobile phones this year.
The mobile user base in Indonesia is predicted to reach 146 million mobile users by 2010. And mobile advertising is increasing as consumer data charges and evolving handsets are leading to more mobile web usage.
“With an increased focus on measurability, mobile advertisers and publishers are recognizing the value of the Indonesia market,” said Mr. Abhay Singhal, Co-Founder and Head of Global Ad Sales at InMobi.
Smart Phones: BlackBerry versus iPhone
The most popular smart phones in Indonesia currently are the iPhones and the Blackberrys. As of September 2009, the Blackberry has boldly beaten the Iphone in mobile advertising. This has several implications:
In mid-August 2006, Telkomsel launched the third-generation (3G) service in Indonesia and on that very day acclaimed the start of a new era in the country’s mobile telecommunications sector. The 3G service, an upgrade from the almost obsolete 2.5G technology, allows users to combine voice, text, video-streaming and pictures; together with a broadband internet connection, 3G brings users to a new level of networking. Telkomsel remains the largest operator providing 3G services to its customers.
The introduction of 3G services three years ago has contributed to an increase in consumer spending on mobile services in Indonesia. At present, 3G accounts for 6-7% of the entire mobile market forming a very tiny percentage of the total mobile user pool. Although this figure is expected to soar within the next year, there are several reasons for the slow adoption rate:
· Tarrifs form a major barrier to entry
However, a spokesperson from Indonesia Mobile Monday disagrees and claims that Indonesians have climbed up the sophistication ladder in that they are very resourceful – despite all the limitation of technologies and lack of market education, they can still find their way around the mobile Internet. (*source: Mobile Monday)
Very soon, industry players will exploit the mobile data market to offer new revenue models and different forms of mobile Internet advertising.
5. On The Consumer Front
Although efforts have been made to engage consumers to use mobile social media, their access to even normal mobile phone content is still very primitive.
Take the following video for example
Its description says “For 5000 rupiah (SGD0.75) this fellow uploads an mp3 song to your mobile to use as a ringtone.”
With the presence of these machines, it is evident that the general consumer is still not familiar with using the computer to download songs (maybe he does not even have a computer) or Indonesia does not even have the technology of downloading content through an SMS request.
To better serve the mobile phone user community in Indonesia, Roxy Mas (and next to it the Roxy Sqaure) is the main mobile phone building in Jakarta. There are five storeys in Roxy Mas with selling mainly SIM cards, accessories, repair services and mobile content providing services.
Consumers are also still very occupied with gadget accessories/decorations rather than actual applications as shown in the photos below.
The advertisements (shown below) demonstrate that prepaid card usage is predominant especially in the rural parts of Indonesia (see kampong photo on the right). Traditional media is still used to advertise. In addition, their advertisements do not serve the purpose of building brand awareness but to serve the simple need of updating people rates and costs.
5. Future Trends
The country is forecasted to see at least 246.1 million subscribers at the end of 2011 representing a penetration rate of 97.8%. An even more promising prediction would be that by 2013, the total market will double and penetration rates will stand at a shocking 172.3% thus making Indonesia the world’s 4th largest mobile market behind China, India and the United States of America.
It is expected that Telkomsel will continue to be the largest operator boasting an approximately 83 million subscriber accounts by 2013.
According to global telecommunications research firm, Budde Communication, “Indonesia’s mobile market has grown rapidly in recent years … there is still considerable opportunity for market expansion in Indonesia when compared with some of its Asian neighbours.” However, this considerable opportunity for market expansion is very dependent on the country’s resolutions to structural and economic issues.
Our team believes that mobile phone users can better relate to Web 1.5 rather than Web 2.0. Instead of using social media applications in mobile phones, it may be more useful for businesses to engage in e-commerce or mobile marketing.
However, with the commitment and resources that the government and industry leaders are channeling into mobile social media, it is possible that mobile phones could be the primary medium used for driving the social media scene in Indonesia. This comes as no surprise as there are three times as many mobile users as compared to Internet users. In addition, mobile phone users are more familiar and know how to maximize their phones, therefore will be interested and find it relevant to use mobile social media applications.
Also read:
Read more about Social Media in Indonesia:
The mobile market in Indonesia has grown rapidly over the past decade; an increasing amount of Indonesians are making use of mobile phones to do banking, trading, money transferring, and commerce on a daily basis. It is no wonder why Indonesia is by far regarded as the most profitable mobile market in East Asia with the highest mobile subscriber growth in the region. In fact, the country is the 3rd largest and most vibrant market in Asia (see graph below). The Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins climbed to 64.9% in the 3rd quarter of 2007 and although these margins declined a year later, the sector is still robust by international standards.
In 2002, the total number of mobile subscribers in Indonesia stood at 65 million. Five years later, in 2007, the number rocketed to nearly 65 million. Fast forward, the country boasts 144.65 million mobile subscribers to date. The mobile penetration rate is at a whooping 56.8% as of September 2009, surpassing India, however lagging behind its neighboring countries such as Singapore.
Indonesia is predicted to be the third largest mobile market after China and India by 2010 according to the ROA Group.
Indonesia’s telecom regulator is Badan Regulasi Telekomunikasi Indonesia (BRTI) and can also be known as Indonesian Telecommunications Regulatory Body. The BRTI has announced the year 2009 as “Year of Quality Service” for the telecommunications sector; the country will expect to see a sharp rise in quality services in their telecommunications sector.
***************************
1. Telecommunication Service Providers
2. Indonesians and Their Mobile Phones
3. The Rise of Smart Phones
4. 3G Fever
5. On The Consumer Front
6. Future Trends
1. Telecommunication Service Providers
The Indonesian mobile phone market is very competitive, with 11 telcos and Telkomsel dominateing the pool with 50% market share. The other two big players are Indosat (24% market share) and XL (15%). Some of the smaller players include Telkom Flexi (6%), Mobile8 (3%) and Bakrie Telecom (2%).
The top 3 operators now boast a population coverage of over 90% while their smaller GSM counterparts such as Indosat, Satelindo, Mobisel/Orbit and Excelcomindo cover an estimated 70% combined. The presence of these smaller GSM operators have contributed to a healthy competitive environment and helped keep prices low and thus drove industry revenue per minute down by 85%. The lower rates offered by the different providers, coupled with the emergence of cheaper handsets mean that more Indonesians can afford mobile telephony.
While GSM cards offer global coverage, pre-paid cards offer different coverage, offering networks in only a few islands. For example, Exelcomindo’s prepaid service (PRO XL) only offers coverage in Java and Bali only.
More than 90 percent of mobile phone customers in Indonesia use pre-paid cards. Such users are more price-sensitive and likely to switch to competing operators who offer cheaper tariffs.
2. Indonesians and Their Mobile Phones: Till Death Do Us Part
Apart from the usual food stall, there is now a new symbol in the daily life of an Indonesian – the mobile phone and the phone credit stores. These stores sell anything ranging from a cheap mobile phone to pre-paid credit phone cards. There are also stores that pimp mobile phones where customers can buy anything from mp3s or customized casings for their phones.
Over the years, mobile phones have become an integral part of an Indonesian life especially after the Indonesian government de-regulated the telecommunications market in 2000.
3. The Rise of Smart Phones: Combining Internet and Mobile Phones
Clearly, mobile phone penetration is much more successful than internet penetration rates. However, there is a closer relationship between the Internet and telecommunication service when we examine the mobile social networking space in Indonesia.
Mobile Monday recently launched Mobile Monday Indonesia, which has so far held events discussing the growing relevance of mobile social networking sites such as mobile advertising and how to develop mobile social networking applications.
More Indonesian mobile web users are predicted to be found in upcoming years. As figured in Opera website, the number of people in Indonesia who are using Opera Mini to access the web is increasing by a sheer amount of 186.1% per year starting from year 2008. This amount is huge as not all handsets are bound to use Opera Mini, especially PDAs, BlackBerries, and iPhones who have their own web browsers.
Figure 3A: Opera Mini Users in Indonesia from August 2009
Already, mobile users in Indonesia far outnumber active Internet users by 5 to 1, and the country boasts a 56.8% mobile penetration rate verses a 10.4% according toInternet World Stats.
According to data on the InMobi network, Indonesia’s mobile Internet user base has more than doubled within the last 12 months. InMobi estimates 9 million mobile Internet users currently in Indonesia, with 591 page views per user, exceeding the approximate global average of 250 page views per user (source: Opera, 2009). Handset manufacturers are taking notice, as 80% of handsets sold in Indonesia are web enabled.Costly ISP plans, unreliable fixed line infrastructure, and inexpensive mobile data plans with unlimited mobile web usage are also encouraging the adoption of mobile internet browsing.
Specifically, 53% of mobile web users are between the ages of 18 and 27, and 82% of the total number of mobile web users are male.
The top mobile Internet operator in Indonesia is Indosat, which leads the market with 75% share, followed by Telekomsel with 18% and Excelcomindo with 3%. Fierce competition between mobile operators and a price war between vendors created an influx of affordable mobile phones this year.
The mobile user base in Indonesia is predicted to reach 146 million mobile users by 2010. And mobile advertising is increasing as consumer data charges and evolving handsets are leading to more mobile web usage.
“With an increased focus on measurability, mobile advertisers and publishers are recognizing the value of the Indonesia market,” said Mr. Abhay Singhal, Co-Founder and Head of Global Ad Sales at InMobi.
Smart Phones: BlackBerry versus iPhone
The most popular smart phones in Indonesia currently are the iPhones and the Blackberrys. As of September 2009, the Blackberry has boldly beaten the Iphone in mobile advertising. This has several implications:
- An increasing number of people are smart phone-converters in that they are not requiring the Internet while on-the-go
- Indonesians themselves are the drivers of the mobile internet phones (i.e. smart phones)
- There was a fierce competition between the iPhone and Blackberry early this year but Indonesians sense a more practical use with the Blackberry when it comes to mobile internet
(*source: www.blackberryrocks.com)
4. Hot 3G FeverInternet and multimedia services provider PT Indosat Mega Media launched a new IM2 ECO! packages in October 2007, giving customers access to high speed wireless 3.5G broadband in major cities at a monthly fee of US$17.64. This will make broadband internet connectability more affordable across the archipelago.
"The ECO!, in this respect, could be seen as a solution, particularly for students who need to regularly access the Internet on a budget," IM2 executive chairman Indar Atmanto said at a media briefing.
This initiative will further increase internet penetration via mobile phones.
"The ECO!, in this respect, could be seen as a solution, particularly for students who need to regularly access the Internet on a budget," IM2 executive chairman Indar Atmanto said at a media briefing.
This initiative will further increase internet penetration via mobile phones.
In mid-August 2006, Telkomsel launched the third-generation (3G) service in Indonesia and on that very day acclaimed the start of a new era in the country’s mobile telecommunications sector. The 3G service, an upgrade from the almost obsolete 2.5G technology, allows users to combine voice, text, video-streaming and pictures; together with a broadband internet connection, 3G brings users to a new level of networking. Telkomsel remains the largest operator providing 3G services to its customers.
The introduction of 3G services three years ago has contributed to an increase in consumer spending on mobile services in Indonesia. At present, 3G accounts for 6-7% of the entire mobile market forming a very tiny percentage of the total mobile user pool. Although this figure is expected to soar within the next year, there are several reasons for the slow adoption rate:
· Tarrifs form a major barrier to entry
· Lack of appealing mobile content
· Limited handset models and variety
In addition, the main reason that senior officials in the telecom industry share a consensus on for the low number of 3G users is that Indonesians are unsophisticated. · Limited handset models and variety
However, a spokesperson from Indonesia Mobile Monday disagrees and claims that Indonesians have climbed up the sophistication ladder in that they are very resourceful – despite all the limitation of technologies and lack of market education, they can still find their way around the mobile Internet. (*source: Mobile Monday)
Very soon, industry players will exploit the mobile data market to offer new revenue models and different forms of mobile Internet advertising.
5. On The Consumer Front
Although efforts have been made to engage consumers to use mobile social media, their access to even normal mobile phone content is still very primitive.
Take the following video for example
Its description says “For 5000 rupiah (SGD0.75) this fellow uploads an mp3 song to your mobile to use as a ringtone.”
With the presence of these machines, it is evident that the general consumer is still not familiar with using the computer to download songs (maybe he does not even have a computer) or Indonesia does not even have the technology of downloading content through an SMS request.
To better serve the mobile phone user community in Indonesia, Roxy Mas (and next to it the Roxy Sqaure) is the main mobile phone building in Jakarta. There are five storeys in Roxy Mas with selling mainly SIM cards, accessories, repair services and mobile content providing services.
Photo Credits: http://www.bijt.org/
Consumers are also still very occupied with gadget accessories/decorations rather than actual applications as shown in the photos below.
Photo Credits: http://www.bijt.org/
The advertisements (shown below) demonstrate that prepaid card usage is predominant especially in the rural parts of Indonesia (see kampong photo on the right). Traditional media is still used to advertise. In addition, their advertisements do not serve the purpose of building brand awareness but to serve the simple need of updating people rates and costs.
Photo Credits: http://www.bijt.org/
5. Future Trends
The country is forecasted to see at least 246.1 million subscribers at the end of 2011 representing a penetration rate of 97.8%. An even more promising prediction would be that by 2013, the total market will double and penetration rates will stand at a shocking 172.3% thus making Indonesia the world’s 4th largest mobile market behind China, India and the United States of America.It is expected that Telkomsel will continue to be the largest operator boasting an approximately 83 million subscriber accounts by 2013.
According to global telecommunications research firm, Budde Communication, “Indonesia’s mobile market has grown rapidly in recent years … there is still considerable opportunity for market expansion in Indonesia when compared with some of its Asian neighbours.” However, this considerable opportunity for market expansion is very dependent on the country’s resolutions to structural and economic issues.
Our team believes that mobile phone users can better relate to Web 1.5 rather than Web 2.0. Instead of using social media applications in mobile phones, it may be more useful for businesses to engage in e-commerce or mobile marketing.
However, with the commitment and resources that the government and industry leaders are channeling into mobile social media, it is possible that mobile phones could be the primary medium used for driving the social media scene in Indonesia. This comes as no surprise as there are three times as many mobile users as compared to Internet users. In addition, mobile phone users are more familiar and know how to maximize their phones, therefore will be interested and find it relevant to use mobile social media applications.
Also read:
Read more about Social Media in Indonesia:
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, Nov 12 2009, 9:52 AM EST
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